Should You Leave A Specific Gift In Your Will?

“Should You Leave A Specific Gift In Your Will?” Wills & Probate expert Sara Hilliard discusses in her latest blog for Dying Matters Week …..

It can be both tax efficient and practical to include a specific gift of personal items, known as personal chattels, in your Will.

Income Tax Advantage And Beneficiaries

Dealing with personal chattels as a specific gift rather than allowing them to fall into the residuary estate could have an income tax advantage for the beneficiaries.

Income received by Personal Representatives during the period of administration of the estate is deemed to be the income of the residuary beneficiary in any year of assessment. In which, the beneficiary receives a distribution of the residuary estate, to the extent that the distribution is equal to or exceeds the value of income received by the estate in that particular tax year.

Consider The Following:

‘A’ makes a Will consisting of one gift of residue to ‘B’.

‘B’ collects the personal effects valued at £15,000 immediately after the funeral, when ‘B’ was a higher rate tax payer. One year later, ‘B’ finishes work and becomes a non tax payer. ‘B’ will have to pay 40% income tax in respect of the distribution of £15,000, taken immediately after death, that is, the personal chattels. If this had been a specific gift the income tax charge would have been avoided.

Personal Chattels & Executor Distribution

From a practical point of view, a clause giving personal chattels to the Executors to distribute at their discretion (with a Memorandum of Wishes from the Testator) can be very helpful.

The Testator (during lifetime) can change the Memorandum of Wishes addressed to the Executors as often as required, without needing to go to the expense of changing the Will.
The Executors have the flexibility to deal with the distribution of personal items as they see fit, and it cuts out the potential for the residuary beneficiaries to argue over who gets what.

If you wish to update your Will or make a Will for the first time, please do not hesitate to get in contact on 01332 364436 or via e-mail at s.hilliard@timms-law.com.

Alternatively, for further information visit the Wills and Probate section of the website.

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